Acquisition Of Colomer: With the acquisition of Colomer on the cards, we expect Revlon’s hair color market share to expand in the future. More than 50% of Colomer’s sales come from EMEA markets where revenues have been declining for Revlon. We now forecast 2013 revenues to expand by around 2% and grow at an average of around 4% for the rest of our review period. In our earlier model we were estimating Revlon’s hair care revenues to grow at an average of 2% annually. Additionally, we expect Colomer’s acquisition to strengthen Revlon’s skin care fragrance products portfolio. We now expect this segment to grow at a CAGR of over 6% as compared to just over 5% in our earlier model.

Marginal Increase In Profit Margins: EBITDA margins are set to increase with lower interest expenses resulting from debt repayments and a reduction in operational costs from Revlon. Additionally, professional products from Colomer have higher margins which would further increase margins for Revlon in the hair care and skin care segments. However, we are cautious in estimating profit margins for Revlon due to the significant debt load that the company would have with the Colomer acquisition. We have revised our margin forecast to be slightly higher going forward, which lifted our estimates.

Capital Expenditure Revised: We have revised our capital expenditures forecast based on company guidance. Additionally, we have assumed moderate growth rate for capital expenditures and updated our forecast methodology which resulted in a meaningful revision.

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